Trump's Council of Economic Advisers slams CBO findings on Medicaid

The council said 4 million people would leave the Medicaid program in 2018 and 7 million people would leave by 2026 under the Senate healthcare bill. (AP Photo/Evan Vucci)

President Trump's Council of Economic Advisers is pushing back on an analysis from the Congressional Budget Office that projected the GOP's healthcare plan would cause 12 million fewer people to be enrolled in government-sponsored Medicaid.

The council said the CBO's estimates, which look ahead to 2026, should be discounted "because of the large errors made by the agency in estimating the toll" of Obamacare. The Trump administration has used the argument before, as CBO overestimated the number of people who would sign up for private coverage under the Obamacare exchanges.

The council made its own projections about what would happen to Medicaid enrollment, saying that 4 million people would leave the program in 2018 and 7 million people would leave by 2026.

"This estimate is likely substantially inflated since Medicaid enrollees currently pay little to no out-of-pocket costs and most are not subject to the individual mandate penalty," the council concluded.

The council also took issue with using the word "cuts" to describe the changes that the Senate bill, the Better Care Reconciliation Act, would make to Medicaid. The draft bill, the council said, would add $265 billion more in federal Medicaid spending between 2018 and 2026, relative to 2017 levels of spending. The spending could be even higher, at $554 billion, the council said, if people do not drop Medicaid coverage as a result of Republicans repealing the individual mandate, which requires people to obtain coverage or pay a fine.

Obamacare was originally written for all states to expand Medicaid to low-income people, rather than decide which people, such as pregnant women and people who are disabled, would qualify. The Supreme Court ruled in 2012, however, that the expansion was optional for states. As a result, 31 states and the District of Columbia have expanded the program.

The GOP healthcare bill would undo the Medicaid expansion and in the long term set a fixed price on Medicaid rather than a year-by-year match. States could decide whether they want to receive funding as a block grant or a per-capita cap. It also would slow the growth rate of Medicaid to match that of overall inflation, which is slower than the rate of medical inflation.

Critics of that approach say that placing such limits would cause states to ration coverage, which goes to children, people in nursing homes and people who are disabled. Supporters say, however, that the current system isn't sustainable. Those in favor of phasing out expansion say the funding should go toward most vulnerable populations, and they have noted that Medicaid expansion ended up covering more people than anticipated, even though not all states expanded the program.

"The structural Medicaid reforms — capped allotments combined with additional state flexibility — will help preserve the program for those who truly depend on it while protecting taxpayers against wasteful and inefficient spending," they wrote.

In evaluating the effects of the Better Care Reconciliation Act, the CBO report projected that half of the states that hadn't expanded Medicaid would do so by 2026, an outcome the council called an "unlikely assumption," and said they did not believe any other states would have expanded. They also noted that states were considering slashing their own Medicaid budgets as a result of cost concerns that included taking on a share of the expansion.